Nokia on Thursday said its sales continued to drop in the second quarter, while it managed to reduce its net loss amid continued cost-cuts.

Nokia said it shipped 7.4 million Lumia smartphones in the quarter, up 32 percent from the first quarter.

Sales of regular mobile phones, which still account for over half of its device revenues, were also weaker than expected. Shipments of such handsets fell to 53.7 million units, far lower than the market's average forecast for 56.2 million.

The Finnish cellphone maker said second-quarter sales fell to 5.7 billion euros ($7.49 billion) from 7.5 billion euros in the same period last year. Net loss for the April-June period was 227 million euros, compared to a net loss of 1.41 billion euros a year earlier.

"We're pleased to report an underlying operating profit for the fourth consecutive quarter on a group level. We benefited from another strong performance at Nokia Siemens Networks, which continued to deliver well against its focused strategy. With our recent announcement to purchase Siemens' 50% stake in Nokia Siemens Networks, we believe we will create value for Nokia shareholders and look forward to strengthening Nokia Siemens Networks as a more independent entity.

In Devices & Services, our Mobile Phones business unit started to demonstrate some signs of recovery in the latter part of the second quarter following a difficult start to the year. Also, towards the end of the second quarter, we started to ship the Asha 501, which brings a new design and user experience to the highly competitive sub-100 USD market. While we are very encouraged by the consumer response to our innovations in this price category, our Mobile Phones business unit is planning to take actions to focus its product offering and improve product competitiveness.

In our Smart Devices business unit, we continue to focus on delivering meaningful differentiation to consumers around the world. We are very proud of the recent creations by our Lumia team, from the Lumia 520 - our most affordable Windows Phone 8 product which has enjoyed a strong start in markets like China, France, India, Thailand, the UK, the US and Vietnam - to the Lumia 1020, our star imaging product which we unveiled to the world last week. Overall, Lumia volumes grew to 7.4 million in the second quarter, the highest for any quarter so far and showing increasing momentum for the ecosystem. During the third quarter, we expect that our new Lumia products will drive a significant part of our Smart Devices revenue."